December home loan snapshot: Fixed rates tumble amid avalanche of cuts


The latest Reserve Bank cut has, unsurprisingly, served as the catalyst for another round of widespread changes to home loan interest rates, with a majority of lenders having reduced rates over the past month.

According to the most recent Mozo Banking Roundup 1,996 home loan rate cuts were recorded in the Mozo database over the past month and more reductions are likely to follow in December as lenders yet to make post-RBA moves take action.

So what’s changed? As you would expect from this sizeable volume of cuts recorded, the home loan landscape has shifted - average rates have dropped across fixed and variable categories and a number of new, market-leading rates have emerged.

Lenders slash 4 and 5-year fixed rates

Following the emergency RBA cut in March, lenders largely focused on reducing fixed rate offers, and the same has happened again. As a result, all fixed rate home loan averages in the Mozo database have dropped since November 1, with the lowest average now 2.35% for 2-year fixed rates.

However, while the fixed cuts earlier in the year centered on shorter fixed terms, this month lenders have focused their attention on the 4 and 5-year fixed rates. Some of the notable changes in these categories include:

  • Three of the four major banks - Commonwealth Bank, NAB and Westpac - are now offering 4-year fixed home loans with a headline rate below 2.00% for the first time
  • Bank of Melbourne and St.George have become rate leaders in the 4-year fixed category by offering a rate of 1.94% (3.22% comparison rate*) with their respective Fixed Home Loans (Advantage Package)

There were also some significant moves in the shorter fixed rate categories, with new rate leaders emerging in the 1, 2 and 3-year fixed categories. Here’s a snapshot of the lowest fixed rate^ offers in our database and the Mozo averages as of December 1, 2020:

TermRate leaderFixed rateAverage
1-yearTic:Toc1.89% (2.18% comparison rate*)2.38%
2-yearTic:Toc1.89% (2.15% comparison rate*)2.35%
3-yearQBANK1.89% (3.37% comparison rate*)2.38%
4-yearBank of Melbourne and St.George1.94% (3.22% comparison rate*)2.44%
5-yearNewcastle Permanent1.99% (3.36% comparison rate*)2.68%

ME and UBank among the few lenders to cut variable rates

Speaking of trends carried on from the RBA’s emergency cut in March, the majority of lenders haven’t passed on a 15 basis point rate cut to customers in response to last month's cut - although, this was largely anticipated. 

While there was less movement on the variable home loan front, there were enough cuts recorded over the past month to push the average owner-occupier variable rate in the Mozo database 3 basis points lower to 3.31%.

And there were also a few notable variable rate changes:

  • ME and UBank were among the largest banks to pass on a 15bp cut to existing variable rate customers following the November RBA cut
  • Online lenders Athena, FreedomLend, Homestar and Reduce Home Loans also all cut variable rates by 15bp or more
  • Neobank 86 400 launched a new variable rate home loan called the Neat Home Loan which features rates as low as 2.19% (2.20% comparison rate*) for owner occupiers with an LVR of <60%

Interested in seeing how your own rate compares to some of the lowest variable rates around? Here’s a snapshot the five lowest variable rates^ in the Mozo database as of December 1, 2020:

Variable rateLenderLoan
1.99% (2.05% comparison rate*)Reduce Home LoansSuper Saver Variable
2.09% (2.09% comparison rate*)Pacific Mortgage GroupStandard Variable
2.14% (2.17% comparison rate*)HomestarStar Essentials
2.17% (2.20% comparison rate*)Well Home LoansWell Balanced
2.19% (2.19% comparison rate*)FreedomLendVariable Home Loan

RELATED: Home loan rates starting with ‘1’ pile up after RBA cut

Looking for more home loans information? Check out the Mozo home loan hub for the latest news, guides and other resources, or if you’re keen to find a better rate why not start by checking out some of the competitive offers in the table below.

^Based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. For more information on average home loan rates, check out our Australian home loan statistics.

Compare home loans - last updated 11 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Variable Home Loan 70

    interest rate
    comparison rate
    Initial monthly repayment
    3.10% p.a. variable
    3.12% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.

  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.


* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.